After detecting fuel import fraud, Brazil’s Federal Revenue tightens oversight

Following the detection of fraud last week in the import and sale of fuels, oil, and derivatives through Operation Carbon Chain, the Federal Revenue Service announced regulatory changes to strengthen oversight of the sector.

The agency stated that a new ordinance was published on Wednesday (24), establishing several initiatives to reinforce the actions of tax authorities in tackling crimes and irregularities related to import operations.

According to the Federal Revenue Service, the new rules will play a “fundamental role in combating fraud involving the concealment of the real seller and buyer or the party responsible for the operation, strengthening oversight and customs security (fraudulent intermediation).”

“The new regulations aim to improve the detection of irregularities, promote coordinated actions with other government agencies, and ensure greater control over products sensitive to the economy and national security,” the agency added.

Key points of the ordinance:

• Priority treatment will be given to tax and customs crimes, with coordination between the Federal Revenue Service and other public security bodies.
• Actions will be taken to collect evidence, with police support when necessary, to ensure the safety of agents and the effectiveness of operations.
• Specific restrictive rules will apply to the early customs clearance of oil, ethanol, and fuels, requiring formal approval from the Federal Revenue Service.
• Stricter requirements will also apply to the licensing of fuel and oil derivative importers.

“In cases of early clearance of fuels, approval will also be required from the state tax authority of the importer’s establishment and from the tax authority at the fuel’s point of discharge, reducing the risk of fraud against local administrations,” the agency added.

The Federal Revenue Service emphasized that none of these measures will affect companies with a record of “high compliance” with tax authorities, for which procedures will remain “simplified and fast.”

Links to organized crime

At the end of August, a national task force of around 1,400 agents executed search, seizure, and arrest warrants in eight states to dismantle a multibillion-real criminal scheme in the fuel sector, led by members of the Primeiro Comando da Capital (PCC) gang.

The mega-operation, dubbed Hidden Carbon, was considered the largest operation in Brazil’s history against organized crime. The group evaded more than R$ 7.6 billion in federal, state, and municipal taxes, according to São Paulo tax authorities.

It combined three different operations and took place across São Paulo, Espírito Santo, Goiás, Mato Grosso do Sul, Mato Grosso, Paraná, Rio de Janeiro, and Santa Catarina.

The scheme harmed not only consumers who fuel their vehicles in Brazil but also the entire economic chain linked to fuels.

One of the PCC’s methods was the illegal import of chemical products to adulterate fuels. Investigators identified more than 300 gas stations involved in these frauds. Industry sources estimate the impact to be even greater, affecting around 30% of all gas stations in São Paulo state—about 2,500 establishments.

Source: G1

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